General Precious Metals
Velocity Minerals (TSX-V: VLC)(OTCQB: VLCJF) CEO Keith Henderson on a Multi-Asset Gold Production Profile & Takeout Potential
Gerardo Del Real: This is Gerardo Del Real coming to you from the 2021 Precious Metals Summit in Beaver Creek. Joining me today is the CEO of Velocity Minerals, Mr. Keith Henderson. Keith, how are you today?
Keith Henderson: I'm good. Thanks. Very good.
Gerardo Del Real: It's great to have you here in person. How was your trip?
Keith Henderson: Good, nice to get out of Canada for a change. Just a little bit of traveling is nice. Seeing people's faces for the first time in a long time, it's been really good.
Gerardo Del Real: Absolutely. How has the conference treated you thus far? I understand you're very busy. You are building a multi-asset gold production profile in Bulgaria, which I want to chat about because it's a very stable place, but…
Keith Henderson: Probably our third year here, I think. We've got about 40, 42 meetings, something. So, yeah pretty much nonstop from beginning until the end and then we leave at lunchtime on Saturday, so. It's good. It's worth it.
Gerardo Del Real: Nonstop is good. A large reason for nonstop for you is because of the fact that as I mentioned, you have a multi-asset gold production profile that frankly, you have spent years building. You've done it in a place that I don't think gets enough credit for being a stable mining jurisdiction in Bulgaria. I want to get into the assets. I want to get into how stable Bulgaria is. But before that, you and your team have had a pretty good track record of success and I would love for you to explain to the audience a bit of your background.
Keith Henderson: Yeah. I'm a geologist by training, I don't do a lot of geology these days but I've been a geologist for 25 years. And being in the business, I've worked for very big companies and very small companies in many, many parts of the world. I think I picked up a lot of really balanced experience across a range of commodities and we think that we've put a really good team together. The other founders, Mark Cruz, who's CEO at New Pacific, previously CEO and founder at Trevali Mining, which everybody knows and did a great job there. We have that kind of track record on the team and on the board, we've got people who've actually built mines and put operations together, which is great. We also have on the board, Steven Dean, of course he put together Atlantic Gold and is now working in advancing the Blackwater.
The other founders were Stuart Mills, who is our VPX. I don't know how many years experience exactly, I'm going to say 30, but he might not like that. But a real track record of finding gold and a lot of people in this industry say, "Oh, I found this, I found that." Stuart has found a lot of gold and he's found it in a lot of places in the world. And then finally, Daniel Marinov. Daniel Marinov is actually a Bulgarian national, born and bred in Bulgaria. He spent his whole career working all over the world for very big companies. And for this opportunity, he's moved back to Bulgaria and he's managing our operations in Bulgaria. So, it was really great to have him there as well.
Gerardo Del Real: It's rare to see that caliber of talent and success in a team for a company that has a market cap of roughly…
Keith Henderson: $65, $70 million.
Gerardo Del Real: Right. So, when you mentioned the Steven Deans and Mark Cruz, these are gentlemen that have built mines, have monetized assets in the hundreds of millions, even billions of dollars, right?
Keith Henderson: Yes.
Gerardo Del Real: And so, for you to have the market cap that you have, I think that presents the opportunity. Walk me through what it's like working in Bulgaria. I know that's a jurisdiction that isn't on the radar of a lot of speculators. I believe it should be. And I think your experience there could probably speak to that, right?
Keith Henderson: Our experience has been really good. A lot of us left other opportunities and other things in our lives to come and do this. We all believe that it can be something. All of the four founders have got significant share position, so we've got 18% of the company today and that means something to us every day when we get up. Bulgaria has treated us well. We have found the government to be cooperative. We have found that everything works very well there. It's an EU country, obviously has the stability of the EU and you have that kind of backing. The most important thing for us though is that we work with a Bulgarian mining company called GORUBSO, they're our partner in everything we do together. They have an operating CIL plant in the country. It's the only one in Bulgaria, it is really one of the only ones in Europe, and for us to have access to that to process ore is a huge strategic advantage. It really means a lot to us.
GORUBSO are operating a couple of mines, they've permitted mines, they permitted a CIL plant. For us, that's the kind of advice that we need as we move forward now permitting Rozino and moving that forward. We've got the counsel and advice of an experienced Bulgarian company who know how to do it, who have proven that it can be done, and have done it in a very, very timely fashion. So, Bulgaria is great. I couldn't say enough good things about it. And being in the EU is really the most important aspect of that. The European Union provides us with that ultimate backing.
Gerardo Del Real: You mentioned Rozino and you won't say it, but I will. I believe it's a takeout target. I think that the consolidation and the gold space has led producers to become cash rich. I think the balance sheets look really good, I think it's a lot cheaper nowadays to go and buy companies that have stable, profitable economic assets on the cheap per se, at a significant premium. It's a lot easier than exploring because bigger companies don't do that very well. And frankly, the mid tiers don't either.
Keith Henderson: Yes.
Gerardo Del Real: Talk to me about the assets and the flagship.
Keith Henderson: Yeah, Rozino has been a huge success for us. Four year process, we started drilling in July 2017. A year later, we had already put out an initial resource and a PEA. Two years later, a pre-feasibility study. We've been drilling since that and now moving into permitting. That's an incredibly fast rate of progress for any company to achieve.
Gerardo Del Real: Absolutely.
Keith Henderson: We've put together our reserve there 465,000 ounces. It's a very, very solid deposit. It's truly disseminated, meaning that the grade is very consistent through the entire deposit, that translates into easier mining. It's near surface, good strip ratio. We think it's a really attractive asset for us and for anybody else that might be looking at it.
Gerardo Del Real: You mentioned management having significant skin in the game. You also have some pretty supportive shareholders that have pretty significant skin in the game. Can you speak to that?
Keith Henderson: Our share register is kind of interesting. We've got 34% sitting with Artemis Gold and Steven Dean liked what we were doing in terms of the hub and spoke model. Atlantic invested $9 million in early 2019. That asset was then spun out into Artemis gold and they've continued to support the company, continued to finance. So, in total they put in $13 million so far. More recently in late 2020, we took an investment from Dundee Precious Metals, that was $6.7 million. At the time made them a 9.9% shareholder as well. So, two very significant corporate shareholders. With the 18% sitting with management. We have 13% sitting with an individual high net worth in the United States, who's a very close business associate of mine in the states and a very, very loyal shareholder as well. And then this tiny little float of 29% of the shares, honestly within which there's some pretty big positions in Vancouver and elsewhere as well with some of the brokers that liked the story and have been interested from the start.
Gerardo Del Real: You've obviously attracted the smart money into the stock. I can say just from the outside in, it's pretty compelling speculation at current levels and with that float being as tight as it is not going to take much to move the stock higher, right?
Keith Henderson: Yeah, we’ve I guess luckily been moving sideways, like a lot of companies that seen some hard times recently. We just don't seem to suffer from that, just sits there sideways and that's fine. It's much better than all of the alternatives, so I'm okay with that.
Gerardo Del Real: Absolutely. Walk me through the catalysts that are coming up, that that should lead to a re-rating because I think you're overdue for it.
Keith Henderson: Yeah. We've got lots going on and I guess there's two sides to this story. We will continue to do what we're doing, what we've planned to do from the very beginning, which is to continue with the permitting at Rozino. That's probably going to look like a two year process or a little bit more. We've been working really, really hard within the local municipality with the communities. We've been extremely creative in some of the processes and some of the projects that we've put together and frankly, we've gone garnered absolutely excellent support from the local municipality. And we think that's the mainstay of getting mine's permitted, it's not easy to permit a mine. When you announce a permitting process, you tend to attract attention from stakeholders, such as NGOs, anyone that might have an interest in objecting to your project.
But fundamentally when you've got this kind of support locally, things tend to go okay in the end and that's what we think we can do. Beyond that, that's a process that will continue on and frankly, not that interesting for investors sometimes. But we are in the growth phase in terms of exploration. We've got three other projects that we've been exploring. We're currently moving into our Iglika project, which is a big priority in terms of exploration. It's a hundred square kilometer project, we've got 20 targets. We're just going through a drill permitting process right now and hopefully we'll have those permits pretty soon. Beyond that, the things that people don't see, we're constantly in a process of project generation. And just to put some context around that, we've got 250 square kilometers of ground that we've actually been working on over the last four years. We've got another 600 kilometers of ground sitting in applications, which are getting processed. And as those applications come through to us and we begin to work on them people will see the scope of our exploration really expanding.
Gerardo Del Real: Sounds like you have a cornerstone flagship. Sounds like you have a lot of exploration upside, some great shareholders. Let's see if you make it out of the next year before getting taken out?
Keith Henderson: Yeah, hopefully. Well we’ll see what happens. Ada Tepe is our neighbor Dundee's project, that's why they invested. They've communicated this to their own shelters basically as being a strategic investment. And they've told their shareholders that they look at Rozino as a potential add on for Ada Tepe. Ada Tepe is a fantastic asset, it's like four and a half grams, it's at surface, beautiful deposit, but unfortunately, a five-year mine life from here and they will need to add more resources to that. To my knowledge, they don't have any of those resources themselves. The only two resources in this area are Rozino, 20 kilometers away, 465,000 ounce reserve. And our Obichnick project, which we put an initial resource on, 150,000 ounces, that's just 15 kilometers away and there is nothing else in the area.
Gerardo Del Real: A lot to like. Keith, thank you so much.
Keith Henderson: Thanks very much. Take care.
Gerardo Del Real: Pleasure.